Taxes, for better or worse, are a part of everyday life. The same can be said if you run a business. Business owners are responsible for taxes at the federal level all the way down to the city level. With this much tax responsibility, business owners need to know the taxes they need to pay, the amount they need to pay and be aware of filing dates. Making a mistake at any step could result in a hefty penalty; however, proper planning could result in tax breaks.
There are four main types of business taxes that will need to be paid on a yearly basis. These taxes include:
- Income taxes
- Income taxes occur at both the federal and state level. These taxes are either paid by the business (for a C Corporation) or by the owner (for all other types of businesses).
- Employment taxes
- Businesses with employees are required to withhold income taxes for their workers. In addition, you’re required to withhold their share of Social Security, Medicare and unemployment tax (both federal and state). For businesses that are incorporated, you are the employee; therefore, you owe the taxes. Self-employment taxes are due if you’re self-employed as well.
- Sales taxes
- Sales taxes are due if your business sells products and you’re in a state where sales taxes are paid. Rather than pay sales taxes, you collect them from your customers. Failing to do so can leave you with a penalty.
- Excise taxes
- Excise taxes are due on fuel and trucks using highways. These are only due if your business merits them and are paid at the pump.
You can find more information about business taxes here.
This is just a brief summary of the type of taxes you will encounter as a business owner. Click here to learn more about how you can save on taxes. And if you’re looking to formally incorporate your business without the headaches, explore your options for starting a corporation or LLC at MaxFilings today!